1. Field of the Disclosure
The present disclosure relates to payment card systems. More particularly, it relates to a system and/or method for preventing fraud with respect to refunds and chargebacks associated with transactions conducted on payment card and other payment systems.
2. Description of the Related Art
The first credit payment systems were two party systems in which a merchant sold goods to a customer without requiring full or any initial payment. In this system, the customer paid for the goods at a later date, or made periodic payments over a predetermined period of time. These methods of payment are of limited scope and not flexible since it involves only one merchant and the customer must make individual arrangements with each and every merchant, and for each and every transaction.
In a three party system, a single card issuer contracts with customers and issues credit cards to them. The issuer also contracts with merchants, who agree to make sales to customer having a credit card from the issuer. When a card is presented at a merchant's establishment, it is generally the issuer who approves the transaction and pays the merchant. However, this system, a so-called closed system, has occasionally been modified so that another party approves the transaction and interacts with the merchant.
MasterCard, the assignee of the present application, operates within what is known as a “four-party” payment card system. The four key participants in a four-party system are: (i) the consumer and business cardholders that use the cards; (ii) the merchants that accept the cards; (iii) the financial institutions that issue the cards (referred to as the card issuer); and (iv) the financial institutions that sign up merchants to accept the cards (referred to as the acquirer). In a typical four-party payment card transaction, the merchant pays a “merchant discount fee” (i.e., a merchant service charge) to the acquirer in recognition of the services provided by the acquirer in facilitating payment card acceptance by the merchant. However, a substantial portion of the benefits that the merchant receives through card acceptance comes from the value of the network and services performed by the card issuer. For example, the card issuer underwrites and extends credit to the cardholder of a credit card, which enables the sale, and the card issuer assumes the risk of nonpayment by the cardholder, which enables the merchant to get paid for the transaction even if card issuer does not. To compensate the card issuer for providing such benefits to the acquirer's merchant customer, the acquirer pays an “interchange fee” to the card issuer in connection with a payment card transaction. The interchange fee helps to partially reimburse the card issuer for the many activities it performs and costs it incurs that enable the acquirer to provide significant benefits and value to its merchant customers. Interchange fees are only one of the many cost components of the merchant discount fees that are established by acquirers and paid by merchants in exchange for card acceptance services provided by acquirers to merchants.
One problem that banks and merchants face is customer chargebacks with respect to credit card purchases. A chargeback in the payment card industry is a transaction initiated by the issuer on a cardholder's behalf in order to reverse a prior transaction. In a chargeback transaction, it is the acquirer who is debited for the chargeback and who then passes the debits on to the associated merchant. However, in the case of the merchant going bankrupt, the acquirer may be left with a significant loss as the loss is generally not recoverable from the associated merchant.
The problem is particularly acute in the case of credit card purchases of, for example, airline tickets. It is normal practice for airlines to debit cardholders at the time of airline ticket booking, which is generally well in advance of the service being delivered to the cardholder (in this case the service is the airline flight).
There exist several parallel systems for reimbursing airline tickets other than via credit card chargebacks. These include a traveler's private insurance policy, industry bonds, travel agents insurance, and airline liquidators who pay off the debts of an airline when it ceases operations and its assets are sold.
A significant problem is that these parallel systems are not connected to one another and there is no easy approach for an acquirer handling an airline ticket chargeback to determine if the cardholder has already received a refund from one of these parallel systems. It is not uncommon, in airline bankruptcy events, for unscrupulous travelers to receive refunds multiple times, using more than one of these parallel systems.
Thus, there are situations in which a refund of a purchase price must be provided to a customer or claimant. In some cases the customer or claimant has access to more than one source of a refund. There is a potential for fraud or abuse when a refund or chargeback is provided.